2.4 Budgeting

One would think that all budget systems are set up the same way. However, if you check several different systems on the Internet, you will see that they vary. In the system we are presenting, you need to remember that an expense is money you spend. So a difference of ―$12.40 is an expense of $12.40 that you did not have to make. This means that your actual expense on groceries is 12.40 less than you budgeted.

In this budget system, a red (or negative) entry for income is "bad" because you didn't get as much income as you budgeted.

A red (or negative) entry for expense is "good" because you didn't spend as much as you budgeted.

Consumer Suggestion

Do you currently use a budget to keep track of expenses? Read the advice on How a Budget Works to learn why a budget is important and how to implement one for your expenses.

Are you ready to start a budget? Find and download a budget spreadsheet or get ideas on how to design your own.

The total of the difference column is ―$448.47, which means that you spent $448.47 less than you budgeted.

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When I was writing Example 2, I rewrote the budget spreadsheet several times. I checked different Web sites and even talked to a couple accountants. Finally, I discovered that there there are many ways to create spreadsheets for personal budgets.